Trade Liberalization with Heterogenous Firms

Richard Baldwin and Rikard Forslid

No 12192, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the impact of trade liberalization with heterogeneous firms using the Melitz (2003) model. We find a number of novel results and effects including a Stolper-Samuelson like result and several results related to the volume of trade, which are empirically testable. We also find what might be called an anti-variety effect as the result of trade liberalization. This resonates with the often voiced criticism from antiglobalists that globalization leads the world to become more homogenous by eliminating local specialities. Nevertheless, we find that trade liberalization always leads to welfare gains in the model.

JEL-codes: H32 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-pbe
Date: 2006-05
Note: ITI
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Working Paper: Trade Liberalization with Heterogenous Firms (2004)
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